The constitutional provisions relating to taxation in India are designed to ensure that
both the Union and the States have the resources they need to function effectively,
while also protecting the interests of taxpayers. Taxation is one of the most important
sources of revenue for the government. It is used to fund essential services such as
education, healthcare, and infrastructure.
The Constitution divides taxation powers between the Union and the States in a way that
gives the Union government the power to levy taxes on a wider range of items than the
States. This is because the Union government has a wider range of responsibilities, such as
national defence and foreign affairs. The States, on the other hand, have a more limited
range of responsibilities, such as education and healthcare
The Constitution also places some restrictions on the taxation powers of both the Union and the
States. For example, the Constitution prohibits the Union government from taxing agricultural
income and it prohibits the States from taxing inter-State trade and commerce. These
restrictions are designed to protect the interests of taxpayers and to ensure that the taxation
system is fair.
Article 265
Article 265 of the Constitution of India states that no tax can be levied or collected except by
the authority of law. This means that all taxes must be imposed by a valid law and that no tax
can be levied or collected without the authority of law.
The law here means only a statute law or an act of the legislature. The law when applied
should not violate any other constitutional provision
Article 266
Article 266 of the Constitution of India deals with the Consolidated Funds and Public Accounts
of India and the States. The following will form the consolidated fund.
The whole or part of the net proceeds of certain taxes and duties to States
All loans raised by the Government by the issue of treasury bills
All money received by the Government in repayment of loans
All revenues received by the Government of India
Loans or ways and means of advances
Article 268
Article 268 of the Constitution of India deals with duties levied by the Union government but
collected and claimed by the State governments. These duties include stamp duties, excise on
medicinal and toilet preparations, etc. These duties collected by states do not form a part of the
Consolidated Fund of India but are with the state only
Article 269
Article 269 of the Constitution of India provides the list of various taxes that are levied and
collected by the Union and the manner of distribution and assignment of Tax to States. These
taxes include taxes on income other than agricultural income, taxes on corporation tax and duties
of customs
Article 269(A)
Article 269(A) of the Constitution of India was inserted by the 122nd Amendment of the
Constitution in 2017. This article gives the power to collect goods and services tax (GST) on
supplies in the course of inter-state trade or commerce to the Government of India. The
proceeds of this tax are then apportioned between the Union and the States in the following
manner:
50% of the proceeds are directly apportioned to the States.
The remaining 50% is credited to the Consolidated Fund of India (CFI).
Article 277
Article 277 of the Constitution of India provides that cesses, fees, duties or taxes which were
levied immediately before the commencement of the Constitution by any municipality or other local
authority for the purposes of the State, despite being mentioned in the Union List, can continue to
be levied and applied for the same purposes until a new law contradicting it has been passed by
the Parliament
Article 282
Article 282 of the Constitution of India provides for grants by the Union government to the
States for any public purpose. The grants can be made for special, temporary or ad hoc
schemes. The power to grant sanctions under Article 282 is not restricted
The case of K. Gopinath v. the State of Kerala is an example of how Article 286 has been
interpreted by the courts. In this case, the Supreme Court held that the sale of cashew nuts by the
Cashew Corporation of India to local users was not in the course of import and did not come
under an exemption of the Central Sales Tax Act, 1956.
